Healthcare in retirement is one of the biggest questions for many people. At Retiring Right, we can help you sort through the options and weigh their benefits and drawbacks.
If you are age 65 and older
You are eligible for Medicare if you are age 65 or older and are either a citizen of the United States, or have been a legal resident for the past five years.
Medicare Part A (hospital insurance) covers inpatient hospital care, skilled nursing facilities, hospice, lab tests, surgery, and home health care.
Medicare Part B (medical insurance) includes coverage of doctor and other health care providers’ services and outpatient care. It also covers durable medical equipment, home health care, and some preventive services.
Since Medicare does not cover all of your medical expenses, one option is to add a Medicare Supplement, also known as Medigap. This refers to a variety of policies offered by many private insurance companies, but standardized across most states. If you have Medicare, you should be able to take care of all your health insurance needs by purchasing a Medigap plan.
Rather than enrolling directly in Medicare, you may decide to go through a Medicare Advantage Plan, an all-in-one bundling of Medicare Part A (Hospital Insurance), Medicare Part B (Medical Insurance), and (usually) Medicare Prescription Drug (Part D) that is offered by private insurers. It is a way for you to receive your Medicare, not an alternative source of insurance.
If you are younger than age 65
If you are younger than 65, you are eligible for Medicare if you meet certain other criteria:
You have received Social Security Disability Insurance (SSDI) or Railroad Retirement disability payments for 24 months.
You have certain medical conditions:
Amyotrophic lateral sclerosis (ALS / Lou Gehrig’s disease) and have received your first month of SSDI payments.
End-stage renal disease (ESRD / permanent kidney failure) and require dialysis or transplant.
There are several other options for retirees to obtain health insurance before you are eligible for Medicare.
The first option is to find out whether your employer or former employer offers a retiree health plan. Government organizations, universities, schools, and large employers are likely to offer this benefit. These plans often provide excellent coverage at a good value, especially compared to other options that bridge the coverage gap to Medicare.
Another good option is to join your spouse’s plan. If they are still working and have employer-provided insurance, this may be your easiest option. Or, if they already have retiree health insurance coverage, they may be able to add you to their plan.
COBRA (short for the Consolidated Omnibus Budget Reconciliation Act of 1985) extends the benefits you were receiving from your employer’s health plan. Companies with greater than 20 employees are required to allow certain former employees, along with their spouse and dependents, to continue their coverage for up to 18 months after retirement. The caveat is that it can be costly, as premiums can go up significantly.
Public exchanges created by the Affordable Care Act offer another source of insurance before Meidcare. Costs vary according to your age, the state in which you live, the insurance provider, and the plan you are purchasing. Depending on your assets and income, you may qualify for a premium tax credit to offset your costs.Medishare is a faith-based, non-profit health care sharing program. It is not insurance, but it functions in similar ways. Once you reach age 65, Medishare also offers supplemental Medicare plans.
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